Treasury: Microfinancing lending rates outrageous

16Sep 2019
Polycarp Machira
The Guardian
Treasury: Microfinancing lending rates outrageous

MINISTER for Finance and Planning Dr Philip Mpango has directed the Bank of Tanzania (BoT) to reign in microfinance institutions that charge “outrageous” rates on loans.

MINISTER for Finance and Planning Dr Philip Mpango.

Speaking here at the weekend, the minister expressed concern that some  microfinance institutions that claim to offer financial services to people with low income were charging as interest rates above 30 percent.

He said the central bank should intervene and help save the public from the hands of those who are out to make big fortunes from the poor.

"I recently came across one institution that charges an interest rate of 32 percent on loans they give to people. This is outrageous and we cannot allow this," he said, directing BoT to intervene.

Dr Mpango noted that the situation is mostly the same with commercial banks whose interest rates are similarly high too.

Officiating at a ceremony to hand over 203 title deeds to Hazina Savings and Credit Cooperative Society (SACCOS) members, the minister directed that savings and cooperative societies should not get into that trap.

Microfinance institutions are there to uplift people and not to exploit them, he asserted. "I would not like to hear that SACCOS are going the same way," he said, stressing the need to have many people join the savings groups.

The minister praised Hazina SACCOS for the bold step aimed at helping its members get better residences in the capital city, urging other credit cooperative unions to follow suit.

As a member of the SACCOS, the minister was also awarded a title deed for a plot. He expressed satisfaction on how the Dodoma City authority completed the land acquisition process rapidly.

He recalled how it took him six years to get a title deed for a plot in Dar es Salaam, saying "this is very encouraging and I thank the authority for making it in less than six months."

He called on those who got the documents to develop their plots as per the requirements, noting that having the title deed itself is positive as it can be used as collateral in seeking out credit facilities.

On the same note, the minister warned of misappropriation of funds in SACCOS units, calling on the leadership of Hazina SACCOS to refrain from such conduct.

Dr Mpango affirmed that there are people who once they get leadership positions all they do is to siphon money and run away.

Hazina SACCOS chairperson, Michael Mwaiteleko said while welcoming the guest of honour that the group acquired plots and issued title deed to members in different areas, including Dar es Salaam and Kibaha.

"Our target is to help members move from one step to the other, improving their welfare as well as working together to achieve development goals," he said.

The current leadership at the SACCOS would no betray the members trust bestowed on it, he attested before the minister.